Getting A Home Together With Housing Loan
Ever imagine stepping into your new house with your new husband or wife as you begin your life as one? We all want that, that dream home with our dream man. But it's not as easy as that. Unless you have tens to hundreds of thousands of cash lying around someplace, buying your dream place may take you decades. Even with your partner's help, between your salaries both, it will be years or even decades before you can actually buy a tiny place, let alone your dream home. That is precisely why we have home loans.
Housing loan is like saving up for the home you already live in. There's no need to wait ages any longer. But before you and your partner get too excited and pick out a house, see first the most practical one you two can afford. While it is true that you can apply for loan payments for your house, you still have to pay for it in the years to come. So make certain you are willing to give a large piece of both your salaries each month to keep up with the payment.
Before moving to a bigger home for the two of you, save for the deposit while you are still living separately. There are places available that don't require down payment, but paying the fee upfront would give you a lower monthly charge.
In order to start anew with each other, you both need to get your financial affairs settled. From the cost of your engagement ring and wedding rings to the wedding event itself and the honeymoon trip, everything smells of dollars. Unless you paid cash, you certainly have been left with a lot of credit card debts. Sort them out before anything else. It would be better if you can eliminate them entirely before combining your funds together. Couples may get a tough time being accepted for a loan if they have high debt. They may also end up with higher interest rate because mortgage lenders take their debts into account during the study of their application.
To help you see a different view, ask a house loan advisor for advice. It won't hurt to ascertain the price range you can comfortably pay and afford before picking out your house.
Keep in mind, everything affects your house loan terms. If you have lots of debts and very small savings, you will most likely end up with low housing loan. And because you are applying as a couple, both of your records are going to be looked at.
As mentioned, before committing to a major joint buy, it is best that both of you resolve your own financial affairs first. Buying a house will require the better part of your lives paying for it, so make certain both of you are very devoted to that long-term responsibility.
Learn more about a premier advisory firm, providing with free mortgage broking.
A Concise Guide To Buying A New Home
Congratulations! You have now achieved financial viability to be able to acquire a home. So, you fell in love at first sight at a dwelling set in a certain neighborhood that you feel will be ideal in nurturing a family in your near future.
But hang in there for a minute. Before you sign any contracts or shell out your saved up income for the down payment, you have to consider a few matters involving the home you are purchasing. After all, purchasing the house will be one of the greatest financial investments that you are going to have in your life. This is one decision that you could not afford to be a wrong one.
People tend to let their feelings determine their decision-making in terms of house purchase. These individuals often fail to see the obvious defects of the house that they consider is truly meant for them. Then, when the dust settles after move, they discover themselves disillusioned and frustrated with their first house.
Hence, here are some things to closely look into in selecting and buying a house to call your own.
1. Consider the neighborhood
At your initial visit, a neighborhood may look safe and welcoming. However, prior to buying a house, exert effort to visit the neighborhood at different times of the day (lunch hour, afternoons, evenings, etc.) to have a well-rounded impression of the atmosphere in the neighborhood.
2. Consider the community
A neighborhood where the residents care and look out for each other is an ideal place for kids to grow up.
3. Consider the structural defects
Seen from the street, the house calls to you to purchase it. However, it is prudent to closely inspect the structure to see indicators of potential problems, such as leaks, issues about plumbing and electrical wiring, and invasion of pests.
4. Consider the space
If see yourself establishing a family in the future, you have to choose a dwelling that has enough rooms for all family members.
5. Consider the price
Your bank or housing loan agency will evaluate your income, credit history, employment track record, your available assets, etc., and based on the information will decide the amount that they will be able to lend you. So that you will immediately determine if you can afford to buy a house, ask for a pre-approval of your mortgage.
Learn more about a premier advisory firm, providing with free mortgage broking.
Deciding Between Fixed Or Variable Interest Rates
Once you decide to take up a housing loan, the immediate thing that storms your brain is selecting between fixed and floating rate of interest. It is easy to get dumbfounded at this stage if you are not financially educated.
Usually, when the media splashes reports on banks increasing housing loan interest rates in and their impact on Monthly Installments, you may take for granted that it is better to select fixed home loan rates. In fact, your banker may also propose you to go for the same.
Now ideally as it should be, we take for granted that once you choose fixed rate plan for yourself the rate of interest will remain unchanged for the entire period you have fixed the interest rate for irrespective of any incidental increase in the same. But actually this is not necessarily the case.
Here we demystify the nature of fixed interest rate mortgage transaction for you so that you can make an educated decision over the matter.
* Check the small print of a loan. The bank has the right to serve you 30 or 60-days notice that it intends to increase its rates.
* The bank's first-year rates are binding on the bank only for that short period of 1 or 2 months. The 2nd-year home loan rates are not binding at all. Neither are the bank's 3rd-year loan rates.
* Force Majeure Clause
So, while you read your home loan contract, you can spot statement like this:
"Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement."
This is called Force Majeure Clause that enables the lender to undertake appropriate modifications in the interest rates on home loans they approve to their borrowers.
So remember to look at refinancing every couple of years so that you do not pay too much. If you select a good mortgage broker company you can save a lot of money over the life of your home loan and in most cases the consulting cost is free.
Find out more about a premier advisory firm, providing with free mortgage broking.
Singapore Refinancing Your Home
When it comes to mortgages, many individuals do not refinance. A significant number are oblivious they have the choice of changing their loan to different financier; others are simply indifferent. They stick with their very first loaner and the "reward" for such loyalty tends to be higher interest rates. Due to the magnitude of housing loans and the tenure that the loan is amortized over, the interest we are speaking about here can well extend from thousands to hundreds of thousands of dollars. Take a look at the following factors to see whether it's time for you to consider refinancing.
Current Interest Rate
It is definitely a positive indication for you to explore refinancing when your current interest rate is higher than available housing loan packages on the market. A first step to take is to go back to your current banking company or financial institution and ask them to revise your package, otherwise known as repricing. If your lender comes back with an offer, it will normally be better than your current one. You can then compare this offer with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
When you take up a mortgage, there may be a lock-in period where your housing lender will charge you a penalty fee, commonly a percentage of your outstanding loan value, if you were to fully repay your loan. Almost all mortgages also come with a clawback period where the lender will claim back "freebies", such as legal expenses, that they "gave" you when you take up your mortgage (Note: lock-in period is separate from clawback period). It may not be valuable for you to refinance due to such costs.
Loan Quantum
The larger your home loan amount, the larger your savings for the same decrease in interest rates. For instance, 1% on a loan of S$100,000 is much less than 1% on a loan of S$500,000. However, fixed cost to refinancing, which comprises mainly of legal fees, do not vary much with loan quantum. The difference between your current and refinancing interest rates, therefore, has to be bigger for a comparatively smaller loan as fixed cost eats into a more fundamental part of your interest rate savings.
Perceived Interest Rate Movements
Your view on how interest rates is moving can be a factor when considering whether you should refinance. If you are currently on a fixed rate package and think interest rates are dropping, you may want to refinance to a floating rate package. Conversely, if you are on floating rates and believe interest rates are skyrocketing, switching to fixed rates may be a good choice.
Personal Financial Appraisal
If there is a change in your financial state, you may want to change your package particulars via refinancing. For instance, you are beginning your own business organization and do not want unpredictability in other areas. Give some thought to taking up a fixed rate package. Maybe you want cash to invest in another place. Consider raising your loan quantum. Or your monthly income has increased and you want to reduce interest loan payments. Contemplate reducing your loan tenure.
Consider calling us today if you are looking for refinancing in Singapore. We can save you a lot of money plus give you the latest advice all for free.
Learn more about a premier advisory firm, providing with free mortgage broking.
Reinvest Your Home
Many people are unaware that they have the option of switching their loan to other investor; others are simply uninterested. They simply become firm with their first lender but they don't know that it could nring higher interest rates. Due to the amount of housing loans and the term that the loan is amortized over, the interest can ranges from thousands to hundreds of thousands of dollars. The following factors may help you consider reinvesting your home.
Latest Interest Rate
When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Go back to your current bank or financial institution and ask them to reprice your loan package. Your lender might give you an offer. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want to fully repay your loan. Most of housing loans have a clawback period wherein the lender will claim back "giveaways", such as legal subsidies, that they "gave" you when you take up your housing loan. Lock-in period is different from clawback period. Because of this, reinvesting is not recommended.
Loan Quantum
The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your current and reinvesting interest rates has to be larger for a relatively lower loan as fixed cost consumes into a more significant portion of your interest rate savings.
Identify Interest Rate Movements
Analyze how interest rates flow. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.
Personal Financial Evaluation
Give some thought to take fixed rate package. Consider increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure.
Learn more about a premier advisory firm, providing with free mortgage broking.
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Hints for Emigrants Applying a Housing Loan
In Singapore, housing loan packages have two categories: fixed rates or floating (variable) rates.
Fixed rates are sometimes offered for up to 3 years. However, other lenders can go up to 5 years or 10 years. This is opposite from some Western countries where rates can be fixed throughout the loan tenure.
On the other hand, floating rates are classified into published rates or board rates. Like Singapore Interbank Offered Rate (SIBOR) or Singapore Swap Offer Rate (SOR), published rates are normally rates that are issued daily. Meanwhile, board rates are determined by the respective bank or financial institution. Many of the lenders based their board rates to a certain financial benchmarks, yet the precise elements are sometimes not clear and variations in board rates turn indefinite.
There are no limitations for emigrants applying for housing loans. However, the following constituents should be looked at.
Loan to Value
The maximum loan to value (LTV) in Singapore is 90% of the purchase price or rating, whichever is lower. Housing loan packages for 90% financing are limited as some lenders do not extend maximum LTV to emigrants. Loan approval for 90% funding is also tighter than for LTV 80% and below.
Proof of Income
To obtain approval for a housing loan your latest income tax assessment or a letter of appointment from your local employer is required. Some local lenders do not honor tax assessments from other countries.
Landed Property
Before an emigrant can purchase restricted properties like vacant lot or landed properties such as bungalows, semi-detached, and terrace houses, the approval from Singapore Land Authority is mandatory.
In-principle Approval
Try to apply for an in-principle approval before moving with a purchase, since loan applications are more intricate for emigrants. Think of hiring a good and professional housing loan consultant. This may help you save time and money with your loan approval.
Deciding Between Fixed Or Variable Interest Rates
Once you resolve to avail a housing loan, the immediate thing that storms your head is choosing between fixed and floating rate of interest. It is easy to get dumbfounded at this point if you are not financially educated.
Normally, when news media splashes reports on banks increasing mortgage interest rates in and their impact on Monthly Installments, you may take for granted that it is better to opt for fixed housing loan rates. In fact, your banker may also suggest you to go for the same.
Now ideally as it should be, we assume that once you select fixed rate plan for yourself the rate of interest will continue unchanged for the entire period you have fixed the interest rate for irrespective of any incidental increase in the same. But in reality this is not always the case.
Here we demystify the nature of fixed interest rate housing loan transaction for you so that you can make an knowledgeable decision over the matter.
* Check the small print of a loan. The bank has the right to give you 30 or 60-days notice that it intends to increase its rates.
* The bank's first-year rates are binding on the bank only for that short period of 1 or 2 months. The 2nd-year home loan rates are not binding at all. Neither are the bank's 3rd-year loan rates.
* Force Majeure Clause
So, while you read your home loan contract, you can spot clauses like this:
"Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement."
This is called Force Majeure Clause that enables the bank to undertake appropriate modifications in the interest rates on home loans they approve to their borrowers.
So remember to look at refinancing every couple of years so that you do not pay too much. If you select a good mortgage broker company you can save a lot of money over the life of your housing loan and in almost all cases the consulting cost is free.